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CME: Cash Fed Cattle Prices in W21 Lower but Above Year Ago

30 May 2017

US - Cash fed cattle prices last week were lower but remained above a year ago, as reported by USDA-AMS Market News Division, according to Steiner Consulting Group, DLR Division, Inc.

Feeder cattle prices (e.g. 600- to 700-pound steers in Oklahoma City) were higher for the week and above 2016’s. Slaughter hog prices were higher week-over-week, but remained below a year earlier. Our weekly summary of production and cash prices is on the bottom of this page.

In the futures markets, Live Cattle (fed) contracts were a little higher week for the week. For example, using the average of the daily closing prices, August Live Cattle averaged $120.73 per cwt., up $1.41 from the prior week. Feeder Cattle contracts also were higher week-over-week. Producers with yearling cattle out on summer grazing programs interested in hedging mostly look to the September contract; last week that price averaged $150.18 per cwt., which was up $1.34 from the prior week. Turning to the Lean Hog contracts, prices for the balance of this calendar year were up slightly, while prices slipped for early 2018. The June, July, and August Lean Hog contracts for 2017 all were over $80.00 per cwt.

Early last week the news media focused on accelerated talks between China and the US regarding beef and the potential for a deal (China formally opening to US beef) by early June. Then attention jumped to the massive corruption scandal in Brazil that now has engulfed the holding company for meatpacker JBS. Over the Memorial Day weekend, the JBS story continued to unfold with resignations by key members on their Board of Directors. Both those stories could become even more important to the US cattle/beef industry in coming weeks, months, and years.

On Friday, USDA’s National Agricultural Statistics Service (NASS) released the monthly Cattle on Feed report. The report is available here. Three key national numbers make-up the report: 1) the number of head on-feed at the beginning of the month (lots with 1000 head or more capacity); 2) animals placed into feedlots; and 3) head marketed (sold) by cattle feeders. All those categories were near the upper end of the range of pre-report estimates. And those pre-report ranges were wide.

At 11.0 million head, the count of animals in US feedlots as of 1 May was the largest since 1 February 2013. The on-feed inventory was driven higher by large placements compared to the norm for April. Animals placed into feedlots during April were up 11.1 per cent or 184,000 head year-over-year. During April, head marketed by feedlots remained aggressive. On a monthly basis the number of animals marketed in April was up 2.7 per cent (45,000 head) compared to 2016’s. Importantly, adjusting for the number of slaughter days in April (which was one less than a year ago), daily average marketing’s were 7.7 per cent above 2016’s.

The bulk of the year-over-year jump in cattle placed into feedlots (140,000 head of the 184,000 mentioned in the previous paragraph) occurred in the heavier weight categories, that is animals weighing over 700 pounds. The bulk of those heavyweight animals placed during April will be marketed in the September through December 2016 timeframe. In the next newsletter, we will carry on this discussion of the latest NASS Cattle on Feed report and draw some implications.


Daily Livestock Report - Copyright © 2008 CME. All rights reserved.


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